Archive for the 'governamentality' Category

The next disciplinary market wave — if it will come at all — will likely be greatly dependent on commons at every scale of social action. For this reason, a reasonably strong political recomposition wave around commons to contrast this market wave is the minimum that is necessary for social justice and for saving the planet,

. . . if only . . . .

Take this account on venture capital drying up and web companies start-ups looking somewhere else for their development. As the financial crisis intensifies, small start-ups companies mobilise circles of friends to type up code. If they are not able to mobilise enough commoners to turn into social capital, they will then subcontract to the poor. Non profit companies like samasource are devoted to this task, with an incredible zeal, self-confidence, creative-corporate cool image, and conviction of doing good. Just check them out for what a friend has defined an “unbelievable hubris.” They go out and train refugees, poor women and youth into microwork. This is part of a growing phenomenon quite interesting and scary at the same time. Like in those cases, in which reproduction services like reading bed time stories or helping children in their homework can be subcontracted to poor workers on the other side of the world, eager women- and men-fridays mobilised by www.getfriday.com. With some strong coordinated policy commitment this stuff could be part of a possible way forward for capital: the mobilisation of commons either directly (through the production of commodities), or indirectly (through cheapening of reproduction of labour) for the expansion of markets and diffusion of capitalist work. In this sense, microwork would complement microcredit as a strategy to put the planet to work masked as “war against poverty” . (By the way, on microcredit, it is crucial to remind of the riots it provoked in Nicaragua not long ago.

In short, innovation will be either “financed” by commoning — in the hope to reap a reward through creation of a competitive advantage — or it will be subcontracted to the poor, who in turn depends heavily on commons circuits for their livelihoods, something that gives them the “competitive advantage” vis others cyber workers. But not all is lost. Here an interesting hint on a spill-over affect of this training of the poor for microwork: the discovery of facebook.

Maybe the “smarter factions of capital” knows that capital is doomed, but if that is the case, why do they insist on finding ways for “growth”, even if only through the oxymoron of “sustainable development”? Their intelligence, demonstrated for example by the awarding of the Nobel price to Elinor Ostrom, is to see the commons as the basis for new capitalist growth . . .yet you cannot have capitalist growth without at the same time capitalist enclosures. Their intelligence thus risks to push us all to be players in a drama of the years to come, the civil war of the XXIth century: capital will need the commons and capital will need enclosures, and the commoners at these two ends of capital will be reshuffled in new planetary hierarchies and divisions.

Elinor Ostrom Nobel price helps giving legitimacy to the discourse of the commons. After decades of neoliberalism this is certainly a victory. Elinor Ostrom gives us in principle all the elements we need for a discoursive counterattack, if we link her stuff to a sharp understanding of capital. Her basic point is that self government in commons is not only a viable solution, but preferable on many accounts to markets and states (sustainability, democracy, justice). Yet she also teaches us that for commons to work, they require basic conditions to happen. When you think about these conditions within broader dynamics of capitalism, you realise that many of these conditions are threatened by the working of global competitive markets, the wealth polarisation they create, the regimes of state intervention to limit in many occasions grassroots empowerment through commons, and the necessary enclosures than any regime of capitalist growth require. There is a strong incompatibility between a regime seeking economic growth and the universal creation of conditions that facilitate the development of commons. This incompatibility must be stressed and debated, and in this debate we cannot avoid to stress the role of capital in undermining the conditions for commons for all.

I also find it very interesting that Oliver Williamson shared the price with Elinor Ostrom . . .

Below is an extract from the Nobel committee justifying the award.

“Traditionally, economic theory has by and large been a theory of markets or, more precisely, about market prices. However, there are at least two reasons why economic science should extend beyond price theory. First, markets do not function properly unless suitable contracts can be formulated and enforced. Hence, we need to understand the institutions that support markets. Second, considerable economic activity takes place outside of markets  within households, firms, associations, agencies, and other organizations. Hence, we need theories to explain why these entities exist and how they work. This years Laureates have been instrumental in establishing economic governance as a field of research. Elinor Ostrom has provided evidence on the rules and enforcement mechanisms that govern the exploitation of common pools by associations of users. Oliver Williamson has proposed a theory to clarify why some transactions take place inside firms and not in markets. Both scholars have greatly enhanced our understanding of non-market institutions.” (nobelprize.org)

In a nutshel, one author (Ostrom) studies the commons outside capital, while the other (Williamson) studies the rules defining when it is convenient to have firms or markets as a main organisational context for production. Notice that this “convenience” in Williamson argument has to do with the minimisation of the cost of conflict, i.e. with the condition for “efficient conflict resolution”:

“In the early 1970s, Oliver Williamson argued that hierarchical organizations sometimes dominate markets because they provide a cheaper way to resolve conflicts. If two employees quarrel about the allocation of tasks or the distribution of revenues, a chief executive is entitled to
decide. In a market, on the other hand, negotiations have to continue until both parties agree. Haggling costs can be substantial, and there is no guarantee that the final agreement will be either immediate or efficient.” (nobelprize.org/nobel_prizes/economics/laureates/2009/info.pdf)

But firms, i.e. capitalist firms, also rely on some sort of commons. According to Ostrom, “even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences.” (see crookedtimber.org/2009/10/12/the-ostrom-nobel/#more-13312). Thus I wonder whether one could expand Williamson problematic and apply it to commons rather than firms. His theory then would also guide decisions on when it is “economically rational” in terms of “efficient handling of conflict” to rely on markets or when on commons linked to markets, i.e. commons set in competition with one another.
I feel that the two approaches combined or linked in some way could give a workable theoretical framework to advance capital by coopting commons and commons discourse. There are some signs that a “discursive recomposition” of capital is occurring along these lines. As a very minor indication see for example The Economist’s interest in workers co-operatives, especially in moment of crisis and austerity.

Below is the “agenda-setter” video on REDD, which was sponsored by the UN-REDD Program, produced by the London based Television Trust for the Environment (www.tve.org/) and shown as a curtain raiser at the United Nations Secretary-Generals High Level Event on REDD held on September 23rd at the United Nations Headquarters in New York. Read also these two short pieces (from CNN and intercontinentalcry) reporting some of the problems with these programmes. In particular what is interesting here is that the REDD programme is a case of distorted commons, i.e. one in which the “sharing” is functional to capitalist growth and therefore it is a locus of frontline contradictions (such as preventing indigenous to self-manage their forest in the name of climate change). Interestingly, if existing (and not only newly planted trees) forests are given monetary value, and these in turn are turned into tradable credits that can be purchased on the market, a carbon credit glut seems inevitable with a consequent fall in price, making the entire carbon credit scheme even more of a farce.

the common ground of the new management board of global capital is clear:

“Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation and entrepreneurship that are essential for economic growth, employment and poverty reduction.” g20 statement.

There it is, capital’s minimum common denominator among blacks and whites, men and women, rich and poor, center and periphery, “first world: and “third world”. And note, this is a belief.See report See text

there is a a lot going on definitively in the current financial crisis, and events are moving very fast. Hence, let me try to put some order to some untidy thoughts with the disclaimer that I am commenting on a fluid situation and hence I am not 100% committed to what I am saying

* neoliberlism as we know it, is obviously finished. But this was true also before the recent g8 in Japan. The current crisis/meltdown of finance raises the *urgency* of dealing with the impasse they have been facing for some time now. This moment of crisis we are living is where the different positions and strategic horizons are forced to distinguish themselves and/or find a common ground. This is a challenge for both the ruling classes and for the “commmoners”.

* For capital’s *in general* perspective (that is the perspective of the “system that any government must try to the save whatever means necessary” to paraphrase today’s interview to Tory leader Cameroon who had a sudden taste for bipartisanship in the midst of the Tory conference) the impasse must be solved in a way or in another. Whatever way, it must provide the material conditions to launch a new phase of accumulation. This is obvious, even if it may sound a platitude. But it is a platitude that does constitute the strategic horizons within which the current debates are plaid out.

* what way is of course important. We have at play two broad strategies within this horizon. One, which brings together the panicking US administration (Bush and Paulson) with “responsible” democrats who, pace some populism in their interventions that have realised some fine tuning to the robbery of the $700b, thought to go along with the bailout of Wall Street. I agree with Naomi Klein here. The shock is here delayed. The cost of this bailout (on top of skyrocketing military expenditures), would in the near future tie the hands of any US administration and be the basis of more typical neoliberal policies (cut in spending, re-privatisation of nationalised banks during the crisis, etc.) The infrastructure and energy investment promised by Obama will take place if he is elected, but in a context of populist austerity (in which the cuts necessary to fund these investment are distributed “fairly”). If instead McCain goes to the White House, austerity is already embedded in his agenda even without the $700b constraint. In either case, this bailout scenario is relying on the idea that the system could go on more or less as it did so far, a part for some buffering during this crisis. The difference between an Obama and a McCain administration here would be the difference of degree of governance: obama would manage the flow of domestic and international conflict in a more deal prone way and McCain would replay Bush’s script despite his annoying conciliatory tone he uses to dress the substance of his speech. Obviously, financial capital seem to want the bailout, as it save their skins and, potentially, at least part of their bonuses.

* if the rescue plan goes ahead (there is a vote on Wednesday, we will find in a situation in which public money has been used at a massive scale to buy assets above the value they would have had if the market were left to operate as in textbooks. This is not only something that enrages many people, it is also something that opens to a degree the socialisation of finance used, in this case, in order to save the system itself. Here the US “Middle Classes” are really caught in between a rock and a hard place. Bail them out, and swallow the anger that your money goes to save their neck and more sacrifices will be demanded from you tomorrow to pay for the bailout. Don’t bail them out, and face the prospect that your pensions, your access to credit, your job, your children college, your cars, your way of life is ultimately threaten by financial meltdown (see the amazing Bush’s speech) the other day). In this sense, the Middle Class as Middle Class will not get us out of this mess. The Middle Class must accept its end in order to aspire for a truly new beginning.

* now, the failure to pass the $700b plan (so far, don’t forget they are still trying to patch this up) is really interesting. There is obviously a lot of opposition to this bail out, bringing together hard core republicans and radical left types from the street. From a left-populist perspective, the argument has been made that instead of paying “greedy” Wall Street, money should be put towards funding home owners and the recovering of main street. Some versions of latter-day Keynesianism here are always at play. Saskia Sassen for example has made an argument along these lines in “open democracy”. (see also other examples cited in my blog post few days ago) Some of the arguments will be taken on board by McCain and, especially, Obama even if the $700b passes. But the real interesting perspective here is that this crisis is opening up an opportunity for true “market fundamentalists” to step in (even while they are riding as in the late 1970s a populist rhetoric): don’t bail out the suckers of Wall Street, let them face the risk they have incurred. This is the “moral hazard” argument, with which committed marketeers hammer in their sense of value and justice any time they are in front of a crisis. Crises, even big one, have a disciplinary role to play, to brig about needed restructuring. Let them play it. And since they are the true believer in the end of history (that is, really, that market capitalism is the bliss point of human evolution), they are confident that even a crisis of this proportion can be the basis of a new round of accumulation. Obviously, to the limit this stance could threaten the system itself, *if* the “commoners” had gone through a process of powerful enough political recomposition not only in the US, but across borders. Lacking this, lacking this “explosion of the middle class” and its recomposition into commoners and commoning predicated on new values, this stance offers also a great opportunity for truly massive and major restructuring of the economy and livelihoods at a planetary level in capital’s favour. This stance could even open to a period of the US state taking over of Wall Street devalued financial firms at a bargain, hence the creation of a US Sovereign Wealth Fund that would recapitalise in value in proportion to the global restructuring it is able to implement, and of the expectation of world growth it is able to elicit that would be reflected in the value of those nationalised financial firms. This of course could be in “partnership” with other sovereign wealth funds around the globe, a sort of “productivity deal” at governance level. Here we would have a situation in which the Middle Class would be tied to the neck to accumulation prospects (and its enclosures), around the planet not longer simply because of their pensions, but also for anything the state would provide for their reproduction. We can even imagine a situation in which in few years a Milton Fridman’s type of basic income is introduced together with a tax flat rate, grossly reducing tax revenue, but replaced by the revenue of the US people Sovereign Wealth Fund, capitalising itself in direct proportion to prospects of world accumulation (you can imagine the role of the US military then!!).

The main difference between this strategic course of action and the bailout will be in the intensity of the restructuring needed and its time frame. In either case, and whatever the scenarios ahead, it is certain that after the period of financialisation of society we are entering now the period of socialisation of finance. This has been recognised widely, even by mainstream press. The end of neoliberalism as we know it however, is not the end of capitalist enclosures, disciplinary and governance processes. It is the strategic reconfiguration of the social force we call capital on a new plane.

The question for us is how do we intervene in this new context. The question we should raise and problematise is “what socialised finance” — that is, in our terms, when we strip from money and finance its capitalist form and recognise its “rational kernel” as a conduit for the distribution and allocation of social powers — what decisions of social investments, for what priority, for what needs, through what mechanism of commoning, the fucked up commoning of capitalist enclosures and discipline, or others ones, which one?

Here is Bush speech on Wednesday night (24 September) to get the $700 billion bail out in contrast with what he said on July 15 2008 when he said that everything was fine, that productivity was growing, that people are working (”not as good as we’d like but . . .”), etc. Two months ago he was exciting hope in the midst of panic. Now we have the excitement of fear in the midst of meltdown. Almost like at the time of September 11, we are hushed into accepting a massive cost in view of avoiding a greater one, the fall from middle class status (weather real or ideal). Here is the naked emperor: “the top economic experts warn that if not immediate action is taken” we’ll have “financial panic and distressing scenarios” . . .”more banks would fail including one in YOUR community. The sock market would drop even more, which would reduce the value of YOUR retirement account, the value of YOUR home could plummet, foreclosures would rise dramatically, and if you are a business or a farm YOU would find it harder and more expensive to get credit, more business would close their doors, and millions of americans could loose their jobs”

But you may think that this would not touch you, as you credit rating is fine . .ah ah, “even if you have good credit history it would be more difficult for YOU to get a loan you need to buy a car or send your children to college, and ultimately our country could experience a long and painful recession. Fellow citizens, WE must not let this happen.”

As a “long and painful recession” will happen anyway (many are predicting a min of 18 months recession which has already started) this call for action with the consequent bailing out of wall street with a blank check is obviously going to be defended in the future as “if we had not done that we would be experiencing a worst recession.” But the emperor IS naked in this moment of crisis. Part of the US ruling classes are stirring this towards creating a context for near future restructuring and cuts. The public purse will be burdened with debt over Iraq and the bailout and a furthering of privatisation of public services etc, will be on the agenda. And this agenda is fine with the democrats, who are ready to accept a deal with few cosmetic limits to executive pay. What is interesting is that it is the republicans, concerned that the bailout is a step towards “socialism”, that are dragging their feet (see this article in the International Herald Tribune). What’s stewing?

Paulson’s argument for keeping his $700b bailout programme a free gift to his old Wall Street mates is that it is designed to attract private partners who would be discouraged if too many caveats are put into place: see here

check also Naomi Klein’s interview on democracy now . . . .when it was run by Paulson, Goldman & Sacks increased debt exposure enormously, hence today’s bail out goes to safe his old colleagues ‘ass

check this: presidential debate suspended, general states called, bipartisan consensus seeked to frame $700b plan . . .we might be in the midst of a process to generate a new kind of consensus which will set the framework for policies for the next few decades.

also, from Naomi’s bulletin the news that Gingrich is holding an event this Saturday, September 27 that will be broadcast on satellite television to shore up public support for new controversial policies. . . .

here is the breakdown of different take and resistance around Paulson from RGE monitor site:

◦ In its original version, Treasury requests the right to buy anything from any institution (incl. hedge funds) at theoretically any price it deems right without oversight or legal recourse. Management of assets will be outsourced to the private sector. Authority expires Sep 2010. By order of magnitude, the entire shadow banking system incl. brokers and hedge funds is $10 trillion of which $5 trillion are buried in off-balance sheet vehicles.–> House Republicans warn Treasury Secretary Henry Paulson on Sep 24 that his $700 billion financial rescue plan wouldn’t pass and ask for more time to consider alternative ideas.
◦ Ben Bernanke proposes ‘hold-to-maturity’ purchase price instead of current market value described as ‘fire-sale’ price.
◦ Krugman: if taxpayers are to overpay for securities that other private market participants would not take at any price then an equity stake is a MUST; i.e. should be make-or-break issue in Congress.
◦ Democrats’ alternative plan includes measures on: restrictions on executive compensation, Equity stakes in return for bailout to recapitalize institutions and retain upside for taxpayers; Bankruptcy reform to lower debt value of purchased mortgages; Independent oversight of how $700bn are spent; Second stimulus package for Main Street next to bailout for Wall Street.
◦ Industry groups want to temporarily suspend mark-to-market accounting in order no to take a writedown on sold assets
◦ Tett: valuation and pricing issues prevented the first Super-SIV from working, the same might happen again. If bad asset purchase price is too low, writedowns might be too large to bear; if price is too high, taxpayer overpays and has limited upside eventually–>
◦ Geithner (via MarketWatch): The ’shadow banking system’ that needs to be re-intermediated is a $10 trillion market without adequate capital provisions (=$2.2tr commercial paper conduits incl ABCP + $2.5tr repo/reverse repo market + $4tr combined brokerage assets + $1.8tr hedge funds = $10.5tr in 2007) that boomed outside traditional banking. In comparison: the traditional banking system is also $10trillion.
◦ In July, FASB has decided to “eliminate the concept of the Qualified Special Purpose Entity (QSPE)” in the revised financial-accounting standard, FAS 140, starting November 2009. This requires banks to consolidate off-balance sheet vehicles used to package assets into securities –> Up to $5 trillion of dollars worth of illiquid assets/derivatives are buried on banks’ Variable Interest Entities (VIEs)
◦ BIS Joint Forum: CDO of ABS (i.e. structured finance CDOs), CDO^2 are not likely to survive the turmoil .
◦ SIFMA: Global issuance of CDOs from 2004 - 4Q2007 totaled $1.47 trillion. CDO issuance by underlying collateral in 2007: -$254.8bn structured finance CDOs (collateral pool consisting of RMBS, CMBS, CMOs, ABS, CDOs, CDS, and other securitized/structured products) -$148.3bn high-yield loans (rated below BBB-/Baaa3) CDOs -$78bn investment-grade bonds CDOs

Naomi was rebuked by Andrew Sullivan remarks that the problem is not shock, but there is not enough “capitalism”, where people take responsibility, taxes are on a level playing field etc. . . .it is actually quite interesting here the fact that this is the major impasse between the two, on other themes much agreements it seems.

The article above was asking: is this the end of capitalism? A specular question was asked during BBC Newsnight by Jeremy Paxman to Naomi Kleim: what is the alternative to capitalism? There is always an impasse to this question, precisely because the question requires an “ism” for an answer, and we are quite sceptical about providing these (and this is good, it means we are sensible to the fact that the “ism” comes out of our own interaction, and is not a magic formula you and I can campaign on. So, we should say: I do not know what is the alternative to capitalism, but I know what is the alternative to capital, and that is that people start to run their own affairs in common, giving values to other things than profit. For example, the alternative is that instead of giving $700 billion as a blank check to the financial capital of wall street, we let them bankrupt, buy their assets at a bargain, and start use finance as a conduit for socially and environmentally sustainable investment, predicated on social justice. Who decide what is just? well, since these financial powerhouse will be in public hand, we have to open a debate what do we mean by democracy . . .

Here is the Austrian economist position. Here the author claims the bailout will be $5 trillion. The argument is that “More formally, there is a gap between the nominal and real value of debt instruments that across the entire credit spectrum easily exceeds $5 trillion, the risk of which the federal government has assumed.” Through the bailout the federal government is providing a floor to the assets prices above the “real value” of assets (i.e. very low in these conditions). To paraphrase Marx, as soon as wall street and government put their heads together, the sacred laws of supply and demand are repealed.

Three options are given here by the Austrian economist author Don A Rich:

“First, the federal government raises taxes to pay off the difference. That clearly isn’t good news for Wall Street or the wealth-creation process.

Second, the Federal Reserve System prints enough money to prop up debt-security prices at nominal values over time, thereby bringing about equilibrium by raising the prices of everything else. A borderline hyperinflation isn’t good news for Wall Street.
Third, perhaps in some instances the federal government seizes the assets of the financial industry at fire-sale prices, and therefore inflicts the loss on shareholders and private creditors in a bizarre form of monetary-policy-induced, catastrophe-driven socialism or fascism.”

Well perhaps not, perhaps the seizure of financial assets could in principle open to a different and far more democratic use and function of finance as mentioned above.

Here Saskia Sassen’s “New new Deal”: let us spend $700 billion but in different ways (infrastructure, social services etc.). No mention about the link between fed expenditure and gov control on wall street.

“Economic empowerment is about making markets work for women(at the policy level) and empowering women to compete in markets (at the agency level)”

Now, food prices are skyrocketing, fuel for transport and cooking are up, communities are strangled with debt, and what is the World Bank talking about? Empowering women to compete. This is their ultimate solution for everything.

This is what they really mean by “gender mainstreaming”. Imagine women storming cities in the 1970s, hands up high in the vagina symbol screaming at unison “GENDER MAINSTREAMING!!!”: what an image of co-optation could have been. One thing seems clear about this current respectable slogan of World Bank policy on gender and development: whatever will happen through the energy, food, financial, or environmental crises, the subjectification of women to the market in particular, and therefore the reshaping of the conditions of reproduction in general (who knows in what direction…), will be central to their managing of these crises . . .